Financial Oversight and Management Bd. for Puerto Rico v. Aurelius Investment, LLC, 590 U.S. 448

Background

In 2016 Congress enacted PROMESA to address Puerto Rico’s fiscal crisis and created a seven‑member Financial Oversight and Management Board (the Board). The statute directed the President to appoint members without Senate confirmation from lists provided by congressional leaders.
The Board filed Title III bankruptcy cases on behalf of Puerto Rico and several instrumentalities; the Board exercises investigatory, budgetary, and debt‑issuance oversight powers and may initiate bankruptcy proceedings on Puerto Rico’s behalf.
Creditors challenged the Board members’ selection as violating the Appointments Clause; the District Court denied relief but the First Circuit held the appointments unconstitutional and invoked the de facto officer doctrine to preserve prior Board actions.
The Supreme Court granted certiorari to resolve whether the Appointments Clause applies to territorial officers and whether PROMESA’s appointment method was constitutional.
The Court held that the Appointments Clause governs appointments of "Officers of the United States" even when duties relate to a Territory, but concluded the PROMESA Board members have primarily local, Article IV duties and therefore are not "Officers of the United States." The appointments therefore did not violate the Clause.
Because the Court upheld the appointment scheme, it did not decide whether to overrule the Insular Cases, or resolve the First Circuit’s application of the de facto officer doctrine.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Does the Appointments Clause apply to officers who exercise power in or related to Puerto Rico?	Appointments Clause applies; no Article IV exception.	Clause applies generally but need not control appointments of primarily local territorial officers.	Clause governs all U.S. officers, including territorial ones.
Are PROMESA Board members "Officers of the United States" requiring Senate advice and consent?	Board members exercise significant federal authority (bankruptcy, broad powers) and thus are federal officers.	Board members discharge primarily local, Article IV territorial duties and are not federal officers.	Board members have primarily local duties and are not "Officers of the United States."
Does PROMESA’s appointment method (President selects from congressional lists without Senate confirmation) violate the Appointments Clause?	Invalid: bypasses Senate confirmation for principal officers.	Valid because appointees are territorial/local (not subject to Clause).	Not a violation because the Board members are not federal officers.
Should the Court resolve collateral issues (de facto‑officer doctrine, Insular Cases, Federal Relations Act/Public Law 600)?	Plaintiffs urged preservation of First Circuit remedy; some urged reexamination of Insular Cases.	Respondents urged the Court to resolve only the Appointments Clause question.	Court did not decide de facto officer doctrine or whether to revisit Insular Cases or related statutory questions.

Key Cases Cited

Buckley v. Valeo, 424 U.S. 1 (1976) (Appointments Clause analysis for federal officials exercising national duties)
Freytag v. Commissioner, 501 U.S. 868 (1991) (test for ‘‘significant authority’’ in federal appointments context)
Lucia v. SEC, 585 U.S. _ (2018) (Appointments Clause enforcement for federal ALJs; discussed by Court but not dispositive here)
O’Donoghue v. United States, 289 U.S. 516 (1933) (Article III protections apply where courts exercise federal judicial power)
Palmore v. United States, 411 U.S. 389 (1973) (distinguishing local, non‑Article III courts exercising primarily local jurisdiction)
Metropolitan Washington Airports Authority v. Citizens for Abatement of Aircraft Noise, Inc., 501 U.S. 252 (1991) (structural separation‑of‑powers principles apply when Congress legislates under other constitutional powers)
Ryder v. United States, 515 U.S. 177 (1995) (de facto officer doctrine discussed)
Downes v. Bidwell, 182 U.S. 244 (1901) (Insular Cases referenced; Court declined to extend or revisit them here)